/wEPDwUKLTc4MT
ed
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Week 6: Antitrust and Consumer Protection Law - Discussion
Price Fixing and Antitrust (graded)
Look at problem 16-8 found on page 561 of your e-book. We will begin our discussion
this week by working through this "bread" problem to help us understand "per se"
violations and how they affect how antitrust suits are brought and proven. To get
started, let’s answer the following questions about problem 8:
Was Continental’s conduct illegal under the Sherman Act? Why or why not?
Is predatory pricing a per se violation? (Support your answer).
Responses
Responses are listed below in the following order: response, author and the date and time the
response is posted.
Response
419661897,419240
Author
416250440
Date/Time
0
Week 6 Discussion 1 Professor Devine
Who is
"Sherman?"
11/28/2012 11:43:52 AM
Class: Look at the William Inglis & Sons case synopsis in Ch. 16, Problem 8. Does ITT
Continental's conduct of pricing its bread differently in various markets violate the Sherman Act?
Is predatory pricing a per se violation? How can a business or mom and pop shop know all of the
rules to protect themselves from violating these laws and to know when they are the victims of
such violation?
Ginger
419661897
416250440
RE: Week 6 Discussion 1
Jaye Ambrose
- Who is
"Sherman?"
12/5/2012 10:50:22 PM
Modified:12/5/2012 10:51 PM
Continental's conduct of pricing its bread differently in
various markets can violate the Sherman Act If it is proven
that Continental's price fixing monopolizes its competition.
Predatory pricing is a per se violation because it attempts to
injure or destroy other competition within the market.
Businesses can protect themselves against violations or becoming victims
of such violations by knowing the federal antitrust laws as it relates to the
business horizontal or vertical market. Knowing these laws can help
businesses compete and survive in these various markets.
Reference
Jennings, M.M.(2012). Business: Its Legal, Ethical, and Global
Environment, (9th ed.). South Western Publishing
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RE: Week 6 Discussion 1
James Pha
- Who is
"Sherman?"
12/5/2012 12:16:13 AM
"Market power is the power to control prices or exclude competition in a relevant
market. Market power is an economic term that means the firm has a relatively
inelastic demand curve. An elastic demand curve means that the firm’s products have
competition from other firms or from firms with substitute prod-ucts." I think this is
exactly what Continental's was trying to do. So to answer the question, yes, from the
point of view that Inglis is at and maybe struggling this could very well be legitimate
that Continental has violated the Sherman Act.
"Predatory pricing is pricing below actual cost for a tempo- rary period to drive a
potential competitor out of business. Exclusionary conduct is conduct that prevents a
potential competitor from entering the market." Again, here you can clearly see being
Inglis this is exactly what you are feeling. And yes, this could very well be violating
predatory pricing. Going back to the top where I mentioned Market power, there has to
have some sort of predatory pricing to in order compete in this fashion.
It's important that mom and pop shops have a lawyer handy in case of any situation
like these case study we are discussing about. It's important to have someone there to
help you if you don't know exactly what the rules are in doing business, and what laws
are being violated with out knowing.
Jennings, Marianne M.. Business: Its Legal, Ethical, and Global Environment, 9th ed..
9. VitalSource Bookshelf. South Western Educational Publishing, , Tuesday, December
04, 2012. <http://devry.vitalsource.com/books/9781133170624/page/532>
418380650,419241
418316829
RE: Week 6
- Discussion
1 - Who is
"Sherman?"
416250440
Julie Hicks
12/2/2012 10:08:45 PM
Though some of the modern economists consider predatory pricing as a
successful and fully rational business strategy, courts take a different
view of predatory pricing. Horizontal restraints of trade are designed to
lessen competition among a firm’s competitors. The Sherman Act covers
the horizontal restraints of price fixing, market division, group boycotts
and refusals to deal, and monopolization. Predatory pricing is defined in
economic terms as a price reduction that is profitable only because of the
added market power the predator gains from eliminating, disciplining or
otherwise inhibiting the competitive conduct of a rival or potential rival.
The anticompetitive effects of predatory pricing are higher prices and
reduced output achieved through the exclusion of a rival or potential rival.
In this case, Continental is selling its private label bread at below-cost
prices in a predatory price scheme designed to drive Inglis out of the
market. So, Continental's predatory pricing behaviour can be considered a
violation by the court.
YALE L.J. (1981). Economic Definition of Predation: Pricing and Product
Innovation, contestable market approach.
419241488,418445
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RE: Week 6
Discussion Conne Mcclure
1 - Who is
"Sherman?"
12/3/2012 4:09:22 AM
Julie I do not see you point. I think they have violation of what Jaime has
said Robinson-Patman Act. I did not see they were selling the bread below
geogrpahic cost to make it in violation of Sherman Act but I do see them
trying to push the Inglis out of bread business with the private brand which
would fall under the Robinson-Patman Act.
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418380650
RE: Week 6
- Discussion
James Pha
1 - Who is
"Sherman?"
12/5/2012 12:21:33 AM
Hi Conne, I can see how you say that you don't see one competitor
is totally under selling their bread over the other. The real problem
with this is, I think the text didn't give us enough information to
truly determine that if it was way below or just a little below.
Though, from being in Inglis stand point if your business is
struggling almost any acquisition seems possible.
418602953,418862
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RE: Week 6
Discussion Professor Devine
1 - Who is
"Sherman?"
12/3/2012 10:08:06 AM
Important discussion--by the end of the week, we need to
distinguish legal pricing v. illegal price fixing and illegal v. legal
monopolization.
Ginger
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RE: Week 6
Discussion Jamie Blea
1 - Who is
"Sherman?"
12/3/2012 5:19:11 PM
I don't believe the situation is price fixing as the
competitors are not in agreement or working together to
set a specific price. Instead, they are working against
each other, one in an effort to have market power.
However, illegal price fixing is a per se violation of Section
1 of the Sherman Act.
Text chapter 16
420439979
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RE: Week 6
Discussion Conne Mcclure
1 - Who is
"Sherman?"
12/4/2012 4:12:58
AM
Under the Robinson-Patman Act, Continuial is
price fixing with their privite brand, if the brand
is the exact same their name brand they are
selling, they are selling it below their other
brand , if this is true then it is illegal and in
violation of federal law.
420439979
418862604
RE: Week 6
- Discussion
Jaye Ambrose
1 - Who is
"Sherman?"
12/7/2012 7:38:09
PM
Conne,
I agree with your post. What Continual
did regarding selling their bread at a
lower price was illegal and a violation of
the federal law. Continual used price
fixing to gain an competitive advantage
against its competitors. The RobinsonPatman Act helps to prevent unfair
competition and requires businesses to
sell its products at the same price
regardless of who the buyer is and
prevents large-volume buyers from
gaining an advantage over small-volume
buyers.
http://www.investopedia.com/terms/r/robinsonpatman-act.asp#axzz2EQIBoycF
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418445145
RE: Week 6
Discussion Antonia Whittler
1 - Who is
12/4/2012 6:25:44 PM
"Sherman?"
Prof. Devine and class,
Price fixing is an agreement among competitors to raise, fix, or otherwise
maintain the price at which their goods or services are sold. It is not
necessary that the competitors agree to charge exactly the same price, or
that every competitor in a given industry join the conspiracy. Price fixing
can take many forms, and any agreement that restricts price competition
violates the law. Other examples of price-fixing agreements include those
to:








Establish or adhere to price discounts.
Hold prices firm.
Eliminate or reduce discounts.
Adopt a standard formula for computing prices.
Maintain certain price differentials between different types, sizes, or
quantities of products.
Adhere to a minimum fee or price schedule.
Fix credit terms.
Not advertise prices.
In many cases, participants in a price-fixing conspiracy also establish some
type of policing mechanism to make sure that everyone adheres to the
agreement.
Retrieved on December 4, 2012 from
www.justice.gov/atr/public/guidelines/211578.htm
A monopoly is an industry that produces a good or service for which no
close substitute exists and in which there is one supplier that is protected
from competition by a barrier preventing the entry of new firms.
 Examples of prior monopolies include:




 Local telephone service;
 Water service;
 Cable television;
 The U.S. Postal Service.
Retrieved on December 4, 2012 from
www2.econ.iastat.edu/classes/econ101/vandewetering/chapter13notes.htm
Monopolization requires (1) monopoly power and (2) the willful acquisition
or maintenance of that power as distinguished from growth or development
as a consequence of a superior product, business acumen, or historic
accident.
Attempted monopolization requires (1) anticompetitive conduct, (2) a
specific intent to monopolize, and (3) a dangerous probability of achieving
monopoly power.
Retrieved on December 4, 2012 from
www.justice/gov/atr/public/reports/236681_chapter1.htm
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RE: Week 6
Discussion Dana Smicklas
1 - Who is
"Sherman?"
12/4/2012 7:02:53 PM
Giner,
Would a legal monopoly be USPS?
Dana
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RE: Week 6
- Discussion
Professor Devine
1 - Who is
"Sherman?"
12/5/2012 1:15:56
PM
Good example, Dana. Other natural monopolies
might include utilities in some regions of the
country.
Ginger
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421280042
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RE: Week 6
- Discussion
Dana Smicklas
1 - Who is
"Sherman?"
12/9/2012 7:12:22
PM
Ah, yes. I Illinois, we basically only
have once choice, Nicor.
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RE: Week 6
- Discussion
Professor Devine
1 - Who is
"Sherman?"
12/9/2012
7:56:04 PM
Dana: This is common
around the country, such as
in electric, gas, and cable
companies, particularly in
smaller communities.
Ginger
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418460839
418380650
RE: Week 6
Discussion Julie Hicks
1 - Who is
"Sherman?"
12/3/2012 10:57:21 AM
Modified:12/3/2012 10:59 AM
Predatory pricing is hard to prove because you have to
show that the business would likely raise prices to high
levels at some point to make the risk worthwhile. What
makes it additionally hard to prove predatory pricing is
that there is a fine line between that and competitive
pricing. It is focused more on getting customers into your
store than it is trying to bankrupt the other stores to put
them out of business. William Inglis & Sons is a familyowned wholesale bakery whereas ITT Continental is one
of the nation’s largest wholesale bakeries. Anytime that
Continental want to undercut the prices, they can very
easily do it as they have economies of scale. You can
have competition between two companies who are simlar
in size and scale of operations. In this case, I see that
Continental can easily drive these mom and pop shop out
of business using such pricing mechanism.
419960307,419686
418897741
418460839
RE: Week 6
Discussion Professor Devine
1 - Who is
"Sherman?"
12/4/2012 8:24:21 AM
Ever heard of a "price squeeze," class? The U. S. Supreme
Court ruled on this method under the antitrust laws a
couple of years ago. Check it out:
http://www.oyez.org/cases/20002009/2008/2008_07_512 The link to the actual opinion is
found on the right side.
Ginger
419960307
418897741
RE: Week 6
- Discussion
Antonia Whittler
1 - Who is
"Sherman?"
12/6/2012 5:51:57
PM
Prof. Devine and class,
I am sure that I have heard the “price squeeze” concept
in one of my law classes, but it did not stand out to me
to really remember it ten years later. The Pacific Bell
case was interesting and basically abolished price
squeeze liability as an independent basis for bringing
antitrust claims against dominant vertically integrated
firms.
Price squeezes occur “when a vertically integrated firm
operates in wholesale and retail markets, has market
power in the wholesale market, and uses that power to
raise the price it charges for wholesale inputs while, at
the same time, cutting the price it charges for its own
finished goods at retail.”
Retrieved on December 6, 2012 from
www.mondaq.com/unitedstates/x/75578/article.asp?articleid=75578
419686868
418897741
RE: Week 6
- Discussion
Linda Sue Martin
1 - Who is
"Sherman?"
12/6/2012 12:12:26
AM
This case is very interesting. If Pac Bell is
providing wholesale account to ISP at a price
that is close to their own retail price, it does
make the margin of profit very small. This
seems to create a squeeze on the ISP. Since the
profit margins are so small for Pac Bells
competition it seems that the second section of
the Sherman Act would apply. But the courts
held the argument that Pac Bell did not have to
sell the product to wholesalers in the first place.
There was no regulation covering the DSL
service, so in essence Pac Bell did not have to
open up the market to competitors. Interesting
decision. It was counter-intuitive to me, but I do
understand their logic.
Source: Jennings, Marianne M.. Business: Its
Legal, Ethical, and Global Environment, 9th ed.,
9th Edition. South Western Educational
Publishing.
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RE: Week 6
Discussion Anthony Fletcher
1 - Who is
"Sherman?"
Julie,
12/4/2012 10:23:28 PM
I am not sure if you are stating that this situation represents
predatory pricing or if you were simply defining it, but I do think
this situation could be a predatory pricing situation. Continental is
purposely lowering their cost to undercut Inglis & Sons and drive
them out of the market. Since Continental is a larger corporation
fighting for market space against a smaller mom-and-pop
business, they can use their market leverage and power to their
advantage. Inglis & Sons are claiming that it is below-cost
pricing, but evidence isn't provided to prove this is fact. Often
times smaller mom-and-pop costs can be more per product
produced than a larger corporation. It may be below-cost in the
Inglis & Sons minds, but it may not actually be below-cost pricing
for Continental. Regardless, because there isn't evidence and only
a claim of the below-cost pricing, I don't believe it can be
considered predatory, just simply a competitive move to drive
business growth and profits.
420774337,420368
420221896
419214748
RE: Week 6
- Discussion
Professor Devine
1 - Who is
"Sherman?"
12/7/2012 8:57:50 AM
You all have provided excellent analysis of complex issues this
week. Here is an excellent summary of the various ways in which
monopolization can occur: http://corporate.findlaw.com/businessoperations/executive-summary-of-the-antitrust-laws.html (could be
helpful in studying for the final exam!). There is interesting mention
of mergers. Perhaps you all have heard of proposed mergers that
were denied due to the ultimate monopoly power that it would give
the company?
Ginger
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420221896
RE: Week 6
- Discussion
Carletta Jones
1 - Who is
"Sherman?"
12/8/2012 5:38:38 PM
The proposed merger between MCI World Comm and
Sprint a 129 billion dollar deal was pulled in June of 2000.
The US Justice Department requested that the merger be
blocked because the merger would harm competition in
the long distance market and could possibly stifle
technological growth.
http://money.cnn.com/2000/06/27/deals/worldcom/
421310909
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RE: Week 6
- Discussion
Michael Como
1 - Who is
"Sherman?"
12/7/2012 4:21:21 PM
A large recent failed merger was the AT&T and T-Moblie
proposed merger between the 2nd and 4th largest
telecommunication providers. AT&T walked away from
this, despite dealing with a cost of $4 billion to walk away.
Sprint, the 3rd largest company, was claiming this would
cause a duopoloy in the market.
http://www.wired.com/business/2011/12/att-tmobilemerger-ends/
421310909
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RE: Week 6
- Discussion
Professor Devine
1 - Who is
"Sherman?"
12/9/2012 7:57:02
PM
Michael and Carletta: Excellent examples to
show the role of the government in approving or
rejecting proposed mergers in light of the
antitrust laws.
Ginger
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417967046
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RE: Week 6
- Discussion
1 - Who is
"Sherman?"
Jamie Blea
12/2/2012 10:34:46 AM
From what I am reading Price Descrimination is prohibited by the Robinson-Patman Act
, this includes discrimination in price among purchasers (inlcuding those in different
markets). However my question is, if this is true, why is it that things in say a Target
in New York are more expensive then a Target in Wyoming? Or how are restaurants
allowed to put out ads but exlude certain stores, such as the Olive Garden in Times
Square?
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RE: Week 6
Discussion Conne Mcclure
1 - Who is
"Sherman?"
12/2/2012 5:39:57 PM
Jaime it is my understanding in the reading the pricing is determined by the
geographic location. New York things are more expensive than they are in
Wyoming. Alot of pricing is determined by the location of the store. Think of
rent, land cost, pay to employees and parking for customers all those things
effect the cost of an item in a store.
420420344
418138307
RE: Week 6
- Discussion Antonia Whittler
1 - Who is
12/7/2012 6:48:23 PM
"Sherman?"
Jamie & Conne,
Great posts from both of you! It really boils down to the
cost of living in the area in which the stores and
restaurants are situated. It appears that down south
the cost of living is much cheaper than northern areas.
I was so upset a few Christmases ago. I went into a
City Trends in Detroit and was only able to purchase
two outfits for $100.00, whereas when I am down
south in Virginia I could usually purchase four to five
outfits for $100.00. Even a McDonald’s Value Meal is
more expensive up north than it is down south. Now I
purchase my nonperishable food at the Wal-Mart in
Virginia before I travel home to Detroit for vacations.
That is so sad that I am so used to these lower prices
now that I do not want to spend more money when I go
home for groceries. Similarly, with my employer the
same employee position is paid different amounts due
to the areas the employment position is located
because our employer provides cost of living
adjustments. Where I may make $30.00/hour for my
employment position, an employee in New York would
probably make $45.00 due to the cost of living
adjustment that is paid out by our company.
418813590
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RE: Week 6
Discussion Linda Sue Martin
1 - Who is
"Sherman?"
12/3/2012 10:39:23 PM
Additional considerations are regional cost of living as well as
median income. Each region will have differences in these areas. It
all affects the pricing.
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418136442
Sherman
Act
0
Conne Mcclure
12/2/2012 5:36:35 PM
No, it was not in illegla under the Sherman Act. Under section 2 of the Sherman Act, Inglas has
the prove the Continental is selling the bread below the cost of making the bread in the area.
Ingelis could go after the them for trying to create a monoply in the geographic location.
418528791
418405757
418136442
RE:
Sherman
Act
Garrett Jones
12/3/2012 7:47:58 AM
Conne I agree. Unless Inglis can prove otherwise the action in and of itself was not
illegal under the Sherman Act. Inglis must prove that the actions of Continental were
predatory pricing by providing evidence that they are selling their bread below cost. A
distinction must be shown between a predatory price and a competitive price. Just
because Continental is selling bread cheaper than Inglis does not mean it is predatory
pricing as Continental could have different suppliers and processes in place to keep
costs down.
418528791
418405757
RE:
Sherman Colleen Walker
Act
12/3/2012 2:20:24 PM
I also agree with Conne. Is contenintal selling the bread for cheaper than it is
to make it? And can Inglas prove this if it is happening? As far as Monopoly, I
think this would definintly be a way they can come at Continintal for what is
happening. If it is a monopoly the government can possibly regulate and
make a more fair market place for Inglas and Continental to go business in.
419801590
RE:
Sherman
Act
418136442
Latrice Donaldson
12/6/2012 11:16:18 AM
Good afternoon Connie. After reading your post, I have to beg to differ. Now
I could be completely wrong and not fully understanding the reading. For
Inglis to file the complaint against Continental, the company must have/had
to have some evidence to support their claim. The evidence could have
merely been sales report for the Inglis company and the sales report for
Continental, and then of course, a sales comparison between the two could
have been done. Never-the-less, I still feel that Continental's conduct was
illegal under the Sherman Act. "Monopolization, according to Adkinson,
Grimm, and Bryan, refers to certain types of strategic behaviors that may be
unlawful when a firm is engaged in seeking to obtain or maintain monoply
power...the anticompetitive conduct is employed to acquire monoply power
which exposes consumers to the price, output, and innovation effects that
could result from monoply, as well as, maintaining the monoply position,
which prevents rivals from entering or effectively competing with the
monopolist and therefore, prolonging consumers' exposure to the effects of
the monopoly."
To read more on the information that I just provided, the URL is
http://www.ftc.gov/os/sectiontwohearings/docs/section2overview.pdf.
Reference:
http://www.ftc.gov/os/sectiontwohearings/docs/section2overview.pdf
420649729
RE:
Sherman
Act
418136442
Stephanie Knights
12/8/2012 12:14:14 PM
The question is how will Ingles prove that Conitential is violating the Sherman Act? The
company would have to be provided access to Continental's pricing structure, as well
as its company's balance sheet to confirm if price fixing is involved. Violations of the
Sherman Act are the responsibilty of the Antitrust Division of the United States Justice
Department and could results into imprisonment and hefty fines.
http://www.justice.gov/atr/public/guidelines/disaster_primer.htm
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418727451
ANTITRUST
AND
CONSUMER
PROTECTION
LAW
0
Antonia Whittler
12/3/2012 8:24:11 PM
Prof. Devine and class,
My initial gut response would be yes, Continental’s conduct was illegal under
the Sherman Act as a violation of Section 2. Monopolizing trade a felony;
penalty. Continental had two brands, with one brand being sold at a lower
price than the advertised price. Inglis can make a valid argument that
Continental did so to engage in predatory pricing. It just seems that what
Continental is doing is wrong, unethical, so therefore it must be illegal.
However, when we look at the test for predatory pricing it could be hard for
Inglis to meet both elements of the test. “Below-cost pricing intended to
eliminate specific competitors and reduce overall competition is known as
predatory pricing. Section 2 disallows this conduct. In Brooke Group Ltd. V.
Brown & Williamson Tobacco, 509 U.S. 209 (1993), the U.S. Supreme Court
devised a two-part test to determine if predatory pricing had occurred. First,
the plaintiff must establish that the defendant’s production costs surpass the
market price charged for the item. Second, the plaintiff must establish that a
“dangerous probability” exists that the defendant will recover the investment in
above-cost inputs. In Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber
Co., Inc. (05-381) (2007), the Supreme Court said that this test also applies
when determining if a predatory bidding scheme exists.” Retrieved from
www.law.cornell.edu/wex/antitrust . It will be hard for Inglis to establish both
elements of the Brooke Group test.
Retrieved on December 3, 2012 from
www.justice.gov/usao/eousa/foia_reading_room/usam/title7/ant00008.htm
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RE:
Chelsey Houwen
12/8/2012 9:02:45 PM
ANTITRUST
AND
CONSUMER
PROTECTION
LAW
Is it really illegal for a business to sell their product below the
market value? Because some businesses do that. The reason
they do that is to get people to buy their product. For
example, amazon sell products for a low price than the
original manufacture (i.e. Samsung or Dell). How can a
company like Amazon be able to sell products below its
original market value (or get around it)?
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The
Microsoft
Case
0
Professor Devine
12/4/2012 8:27:05 AM
We cannot discuss antitrust law without considering the Microsoft case. For the final exam, class,
you may be asked to apply the court's analysis from the Microsoft case to a scenario. What
factors will a court apply in determining whether or not an illegal monopoly exists?
See: http://www.justice.gov/atr/cases/ms_index.htm
Ginger
419342776,420122
418903950
RE: The
Microsoft
Case
418898441
Garrett Jones
12/4/2012 8:48:14 AM
In the Court's Findings of Facts they have narrowed down the factors that the court
applied in determining an illegal monopoly existed in the Microsoft Case. "Viewed
together, three main facts indicate that Microsoft enjoys monopoly power. First,
Microsoft's share of the market for Intel-compatible PC operating systems is extremely
large and stable. Second, Microsoft's dominant market share is protected by a high
barrier to entry. Third, and largely as a result of that barrier, Microsoft's customers
lack a commercially viable alternative to Windows." The factor in which I believe is the
most significant evidence a monopoly exists is the lack of commercially viable
alternatives.
http://www.justice.gov/atr/cases/ms_index.htm
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RE: The
Microsoft Colleen Walker
Case
12/5/2012 11:13:10 AM
Yes, Garrett I agree that the most significant evidence is the lack of
commercially viable alternatives. But is it Microsofts fault that there is a lack
of alternatives? There are other personal computers that people can buy, like
Apple, which would not have a Microsoft operating system in it. However, the
fact that Microsoft would be able to bundle Internet Explorer into it's
operating system, and everyone wanted to use Internet Explorer, and was
thus having to use Microsofts operating system, would be a monopoly. If
people wanted to use Internet Explorer than they would have to use
Microsoft, which leaves huge barriers to enter this type of product for any
other company that might want to.
420122225
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RE: The
Microsoft Anthony Fletcher
Case
12/6/2012 10:22:58 PM
I personally don't use Internet Explorer unless I
absolutely need to and think Firefox or Google Chrome is
much better, but I agree that prior to these other
browsers existing Microsoft did have, by definition, a
monopoly in the industry. The second main fact listed in
the case was the high barrier of entry into the market.
That may have been the case then, but I think more and
more we are seeing that barrier slowly decrease with the
introduction and enhancements in modern computer
technology. The reason for the barrier up to this point is
caused mainly by consumers who don't care to learn how
to use a new operating system, which is probably not
nearly as compatible as Microsoft. Apple was finally able
to really break through to consumers, showing other
companies that it is possible to overcome the barrier. I
think in the future we will begin to see more and more
new entries into the market, as consumers become more
familiar with technology and more curious and interested
in using a new product,
419132066
419053133
418903950
RE: The
Microsoft Blanche Meriweather
Case
12/4/2012 4:56:37 PM
great point Garrett;
I think a monopoly did exist because, a monopoly is one or more persons or
companies totally dominates an economic market. Monopolies may exist in a
particular industry if a company controls a major natural resource, produces
(even at a reasonable price) all of the output of a product or service because
of technological superiority (called a natural monopoly), holds a patent on a
product or process of production, or is otherwise granted government
permission to be the sole producer of a product or service in a given area.
Microsoft did show that different barrier to it.
419132066
419053133
RE: The
Jamie Blea
12/4/2012 7:36:12 PM
Microsoft
Case
I would agree with Blanche- I believe Microsoft to this day does
have a Monopoly its its world of technology. It does dominate the
economic market in that field. I would also agree that Microsofts
argument was valid in that they have a natural monopoly for the
time being. There are many start up companies that may be testing
the waters soon to come.
419170783
RE: The
Microsoft
Case
418898441
Latrice Donaldson
12/4/2012 8:46:46 PM
Good evening Dr. Devine and class members. The factors that a court will apply in
determing whether or not a illegal monoply exists is actually found in this excerpts: In
determining whether a competitor possesses monopoly power in a relevant market,
courts typically begin by looking at the firm's market share and their dominant market
share; a market share of 90% is enought to constitute a monoply.
Courts typically have required a dominant market share before inferring the existence
of monopoly power. Monopolization is rarely found when the defendant's share of the
relevant market is below 70%; other circuits state that to establish monopoly power,
lower courts generally require a minimum market share of between 70% and 80%.
It is also important to consider the share levels that have been held insufficient to
allow courts to conclude that a defendant possesses monopoly power. One circuit held
that a market share at or less than 50% is inadequate as a matter of law to constitute
monopoly power.
Some courts have stated that it is possible for a defendant to possess monopoly power
with a market share of less than fifty percent. These courts provide for the possibility
of establishing monopoly power through non-market-share evidence, such as direct
evidence of an ability profitably to raise price or exclude competitors.
Significance of a Dominant Market Share
A dominant market share is a useful starting point in determining monopoly power.
Modern decisions consistently hold, however, that proof of monopoly power requires
more than a dominant market share. One circuit held that a court will draw an
inference of monopoly power only after full consideration of the relationship between
market share and other relevant characteristics.
To read this information in its entirety, the URL is
http://www.justice.gov/atr/public/reports/236681_chapter2.htm.
Reference:
http://www.justice.gov/atr/public/reports/236681_chapter2.htm
419832420,419794
419117240
RE: The
Microsoft
Case
418898441
Dana Smicklas
12/4/2012 7:09:54 PM
We had this debate in several classes thus far and honestly, I do think that Microsoft is
a monopoly, but by consumer's choice and not by any illegal means. Microsoft
produced products that did the job better than other products and by doing so mass
amounts of businesses purchased the software. In seeing Microsoft's popularity, other
companies built add-ons or programs that integrated seemlessly with Microsoft
products. Now, by their own design, consumers are basically "stuck" with Microsoft
products because it would be too costly to get rid of them. In the numerous
conversations I have had in classes over the years, about the only thing everyone can
agree on as Microsoft's "guilt" is concerned is that they built products that just worked
better and integrated better than others.
419832420
419117240
RE: The
Microsoft Colleen Walker
Case
12/6/2012 12:38:25 PM
I agree with Dana here completely, and I have also discussed this topic in
other classes. Microsoft had a monopoly becuase it was what the consumers
wanted to buy. Microsoft produced the better product, marketed the better
products, and took care of the better product which is why it gained a
monopoly this way. I think that in the computer/software industry most
people really do their homework on what computer they want to buy. They
don't just go to a store and buy the cheapest one. They want the best one
that their money can buy, and in this case it was Microsoft and that's where
the monopoly came about.
420508086,421281
419794375
419117240
RE: The
Microsoft Professor Devine
Case
12/6/2012 10:56:11 AM
Dana: It is a classic case, so we have to discuss! But there are other cases
out there, such as arguments that Google is a monopoly, for example.
Antitrust law is definitely complex, but we will do our best this week to
consider the basics.
"It is imperative that one be clear and specific in one's definition of
"monopoly". When people speak, in an economic or political context, of the
dangers and evils of monopoly, what they mean is a coercive monopoly - i.e.
exclusive control of a given field of production which is closed to and exempt
from competition, so that those controlling the field are able to set arbitrary
production policies and charge arbitrary prices, independent of the market,
immune from the law of supply and demand. Such a monopoly, it is
important to note, entails more than the absence of competition; it entails
the impossibility of competition. That is a coercive monopoly's characteristic
attribute, which is essential to any condemnation of such a monopoly." See:
http://seekingalpha.com/article/153265-apple-microsoft-google-far-fromcoercive-monopolies
Section 1 of the Sherman Act prohibits "every contract, combination . . . or
conspiracy in restraint of trade . . . As set out in the article below, courts
have held that this restraint of trade must be "unreasonable" to be illegal
competition.
http://library.findlaw.com/1999/Jan/1/241454.html
Based on the Microsoft case, is this author correct? Illegal monopoly =
impossibility of competition, not absence of competition?
Reference:
Steuer, Richard M. (1999). Findlaw.com. "Executive Summary Of The
Antitrust Laws." Retrieved from
http://library.findlaw.com/1999/Jan/1/241454.html
Ginger
420508086
419794375
RE: The
Microsoft Linda Sue Martin
Case
12/7/2012 10:34:10 PM
I agree and disagree (strongly) with Dana. Whereas it is
true that Microsoft had a majority of a market that they
themselves created. But the notion that their products
were better than other is simply not true. I can
remember products that were far better than Office. I've
been in technology support roles since the 80s (OK I just
dated myself), and I witnessed the tactics of MS. They
may have been legal, but here is a perfect example of
unethical behavior. I will give a struggling new comer to
a market a little latitude in behavior when they enter a
market. But once you get to the top and command such a
dominance as MS, the behavior ie. ethics should no
longer to cut-throat.
There were many cases where MS, having a very large
purse, would simply purchase the competitor. I watched
some really fine applications completely disappear after
MS bought them. Now how could this little company with
a small but unique niche in the market ever really take
any serious market share away from MS. But one day I
saw a news story about the company being purchased by
MS and poof the application disappeared forever. Never
even showed up in other MS products. In my mind this is
unnecessary and this kind of purchase and burn is an
unethical activity.
MS maintained their dominance by establishing very
sweet deals with corporations using licensing deals that
locked corporations into using ALL their products, for
years. Then they keep them on the hook by making it
effecting too expensive to change. They regularly made
deals that locked out the competitition.
Since you mentioned Google, lets go there. Their strategy
is completely different from MS. MS is propriety, if a
developer wants to build an app on MS-OS than the
developer must get a licensing agreement from MS and
pay fees. Whereas Google's Android is completely open
source. No licensing, no fees, and it is developed virtually
by the technology community. There activities effectively
span the success of many other companies who have
taken an idea and made a business on it.
It is interesting to see the current technology trends
begin to shrink MS's market share. In the cited site they
show the market for Windows to be 81.75%, while Mac
takes 6.22%, and Linux 1.28%. OS common to
smartphones, (iOS, Blackberry, Android) takes 9.32% of
the market. Really smart phones have only been on the
market for effectively for five years. The first iPhone was
introduced in June 29, 2007. Almost 10% of the market
in five years. Not too bad.
source: http://www.netmarketshare.com/operating-systemmarket-share.aspx?qprid=8
http://en.wikipedia.org/wiki/IPhone
421281404
419794375
RE: The
Microsoft Dana Smicklas
Case
12/9/2012 7:14:22 PM
I would say that the author is not correct, in the case of Microsoft,
because there are alternative, but people/businesses choose not to
utilize/purchase them.
419233572
RE: The
Microsoft
Case
418898441
Julie Hicks
12/4/2012 11:35:48 PM
Microsoft was prosecuted for violations of the Sherman Anti-Trust Law. In
United States v. Microsoft, prosecutors alleged that Microsoft had
committed monopoly violations in operating system and Web browser
sales and the company was found guilty of monopolization under the
Sherman Anti-Trust Law. The first factor is deciding whether a company
even has a monopoly. A definition of a monopoly is where nearly all of
one product type or service is owned by one person or group of people
within a community or area. Thereby, the sole control of this product or
service is given to one party to the elimination of all others within the
marketplace. Courts will usually look at a company’s market share for a
particular product or service to see if a monopoly exists. If a company has
a market share of greater than 75 percent, they will probably be
considered a monopoly. Courts will also review other factors including the
markets affected by the excessive market share, also called the relevant
market. If a fruit grower only grows and sells fruit in California, the courts
will not usually uphold a complaint of monopoly power by a seller who
only operates in New York City, unless the grower can show some type of
overlap in markets. The second part of the test is whether the company
engaged in some type of unfair or anti-competitive conduct. This is
evaluated on a case-by-case basis; and it usually requires some type of
showing that the monopoly power was going to or used to abuse their
monopoly.
References:
U.S. vs. Microsoft: Current case. (n.d.). Retrieved May 11, 2008, from
http://www.usdoj.gov/atr/cases/ms_index.htm.
http://business-law.freeadvice.com/businesslaw/trade_regulation/monopoly_power.htm
419544560,419728
419358164
RE: The
Microsoft
Case
418898441
Joseph Waldrup
12/5/2012 11:56:16 AM
In my opinion, a monopoly does not exist because there is only one provider of a good or
service. For example, in the Microsoft case, the Windows operating system is enormously
popular, but the potential for a competing firm to provide a similar product exists. In fact,
Macintosh is a small but important competitor in the computer and operating system market. A
monopoly can set prices artificially high because it has no serious competitors to force it to do
otherwise. It can also arbitrarily limit the supply of the good or service it provides to create
scarcity and drive prices up. In either case, the monopoly collects a "rent" on its domination of a
particular sector of the economy. This rent represents income above and beyond the efficient
price it could charge for its product in a competitive market environment.
419728029,419793
419544560
419358164
RE: The
Microsoft Bryan Anderson
Case
12/5/2012 7:21:14 PM
You're absolutely right Joseph. Sure Microsoft does hold a large share of the
market, but that doesnt mean it is without competition. I like your example
of Macs. Macs are certainly cutting into the marketshare that Microsoft
possesses, especially with a large portion of the market moving to smaller
devcies such as netbooks and tablets. These smaller devices have opened the
door for Google and Android. Its almost as though the change in consumer
products away from the traditional "box" has caused a complete alteration of
the market standard.
419793879,420490
419728029
419544560
RE: The
Microsoft Garrett Jones
Case
12/6/2012 7:33:22 AM
Modified:12/6/2012 7:33 AM
Good point Bryan I didn't think about how Microsoft's competition is
increasing with enhancements in technology. Macs and the
implementation of netbooks and tablets is a great example.
Although at a time Microsoft had a firm grasp on the market share
as their technology was far more advanced than their competitors,
today the tables are evening out. Does a breakthrough in
technology by a company automatically make it a monopoly? For
lack of a decent example say Toyota comes out with a car that
blows it competitors out of the water, they buy out all their
competitors and become a dominant car manufacturer with few
competitors. Does becoming the best in an industry create a
greater exposure to becoming a monopoly?
420490701
419793879
419728029
RE: The
Microsoft Professor Devine
Case
12/6/2012 10:54:53 AM
In the Microsoft case, the Court clearly defined illegal
monopolization: monopoly power in the relevant
market/industry (power to control price and/or to exclude
competitors from that market) and “the willful acquisition
or maintenance of that power as distinguished from
growth or development as a consequence of superior
products, business acumen or historic accident” (United
States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966)).
The Microsoft court ultimately found that Microsoft's 95%
share of the market established an illegal monopoly.
Ginger
420490701
419793879
RE: The
Microsoft Linda Sue Martin
Case
12/7/2012 9:44:26
PM
Yes indeed the courts did reach that decision.
The resulting settlement was, in my opinion, not
enough. I suspect that there was much going on
behind the scenes to minimize the impact. The
last thing MS wanted was to be split up. Most of
their profits come from Office products not the
OS. It is the OS dominance that drove the Office
products. That and a hugh deal with major
corporation to offer considerable pricing breaks.
Driving the product into the hands of corporate
employees who had to learn how to use it and
then once learned wanted to use it at home too.
Giving licenses to corporate employees to use on
their home pc was another strategy to push out
the competition. If the company were split
apart, I suppose they would have been divided
between OS and Office. The OS would have have
been the losing party. Millions in fines is
something akin to a slap on the wrist. And
donations to school effectively hurt the
competition because the Apple market centered
on school age children. So making donations to
the school actually cut into Apple hold on the
school market and actually increased MS
presence.
420142076
418947981
Price
Fixing and
Antitrust
0
Joseph Waldrup
12/4/2012 11:16:56 AM
Was Continental’s conduct illegal under the Sherman Act? Why or why
not?
I do not believe Continentals conduct was illegal under the Sherman
Act. Continental seemed to only be trying to increase there profit.
Unless Inglis could prove that Continental was illegally trying to
eliminate them as a competitor, this would be looked at as legal. The
law directs itself not against conduct which is competitive, even
severely so, but against conduct which unfairly tends to destroy
competition itself
Is predatory pricing a per se violation? (Support your answer).
No, predatory pricing is not a per se violation. Per se violations
are so obvious that there is nothing else to really look at. It is
usually difficult to prove that prices dropped because of deliberate
predatory pricing rather than legitimate price competition. In any
case, competitors may be driven out of the market before the case is
ever heard.
420142076
RE: Price
Fixing
and
Antitrust
418947981
Edwin Scales
12/6/2012 11:17:14 PM
Joseph
I agree that continental is not in violation of the Sherman Act specifically because this
is not an Interstate Commerce situation. This case stands out because while one
company is a national juggernaut the other company, Inglis is restricted to one state.
While the commerce clause is designed to ensure uniformity and prevent perpetual
interstate court battles. It does not disallow business between companies in one select
market (state) at a time under the good old idea of ‘competition.’
Predatory pricing is difficult to prove. Ethically speaking, it is almost impossible to
know what an individual or company’s intentions are unless they tell us explicitly. The
companies need to monitor prices on shelves, in store discounts and coupons. I tend to
believe that a company with that type of capital would be in severe danger of losing to
their competitor. That leads us straight back to actions one company takes to undercut
the prices of a competitor. In simple terms Predatory Pricing is designed to draw less
revenue and waste money by your competitors. While dishonorable it is not simple to
prove and therefore not a per se violation.
419153986
Price
Fixing and
Antitrust
0
Latrice Donaldson
12/4/2012 8:15:42 PM
Good evening Dr. Devine and class members. Wow..the bread business is cut-throat,
so-to-speak. Predatory pricing is when a company/organization temporarily sells
below survival prices to undermine or run the competition from the market, according
to the Business Dictionary. The Sherman Act is a federal law prohibiting any contract,
trust, or conspiracy in restraint of interstate or foreign trade. It (the Sherman Act)
provides that no person shall monopolize, attempt to monopolize or conspire with
another to monopolize interstate or foreign trade or commerce, regardless of the type
of business entity; there are hefty fines associated with violating this act; an
amendment known as the Clayton Act was birthed from the Sherman Act and the
Robinson-Patman Act was the amendment to the Clayton Act.
1. Was Continental’s conduct illegal under the Sherman Act? Why or why not?
After reading up on the Sherman Act, Continental's conduct was most definitely
illegal and it was quite obvious that Continental practives predatory pricing in regards
to the private label was sold at a lower price that the advertising price, which
ultimately led to some nice profits for Continental, and financial woes for Inglis. As
the definition of predatory pricing stated, this type of practice can drive the
competition completely out of the market, which further means that the competition
could be completely run out of business...no sales, no money equals closed doors.
2. Is predatory pricing a per se violation? (Support your answer).
Violations can be categorized in two forms under the Sherman Act; (1) as a per se
violation or (2) as a violation of the rule of reason. Section 1 of the 1890 act
characterizes that certain practices of businesses as per se violations, which require no
extensive inquiry into the practice's actual effect on the market or the actual intentions
of the individuals involved, according to the Cornell University Law School.
Reference:
http://www.businessdictionary.com/definition/predatory-pricing.html
http://business-law.freeadvice.com/business-law/trade_regulation/anti_trust_act.htm
http://www.law.cornell.edu/wex/antitrust
419224488
Price
Fixing and
Antitrust
0
Carletta Jones
12/4/2012 10:56:36 PM
Yes, I do believe that Continental's conduct was illegal under the Sherman Act due to the fact
that they were involved in predatory pricing, which is basically consist of pricing below the actual
cost in effort to drive out the competition. This conduct is also considered a per se violation.
Any agreement or collaboration among competitors “for the purpose and with the effect of
raising, depressing, fixing, pegging, or stabilizing the price of a commodity” is price fixing, a per
se violation of Section 1 of the Sherman Act.
(Jennings 538)
Jennings, Marianne M.. Business: Its Legal, Ethical, and Global Environment, 9th ed., 9th
Edition. South Western Educational Publishing. <vbk:9781133170624#page(538)>.
420888669
419253136
Predatory
Pricing
0
Conne Mcclure
12/5/2012 4:12:59 AM
Yes, predatory pricing is a per se violation of antitrust laws. In the case under discussion
Continiel is trying to drive Inglis out of the bread business with their private label brand with the
lower prices, as compared to the their national brand. Predatory pricing is when a compnay on
purpose put price below geophic retail to drive a competition out of business in their market
share area.
420888669
419253136
RE:
Predatory
Pricing
Chelsey Houwen
12/8/2012 9:21:12 PM
What do you mean by private label brand? I understand the national brand is known
around the world, like Wonder Bread; since, everyone knows about Wonder.
419676448,419794
419444611
Predatory
Pricing
0
Michael Como
12/5/2012 4:05:40 PM
Continental's conduct would be illegal under the Robinson-Patman act due to they were sellling
the private brand bread at a different price under cost than the same type of bread by the
company. This conduct would be considered predatory pricing because the bread was being sold
under cost. We do not know how long the time period was that the price was reduced under cost
by Continental, but they were undercutting the other company by reducing the cost of the same
type of bread.
419794956,421232
419676448
419444611
RE:
Predatory
Pricing
Edwin Scales
12/5/2012 11:33:10 PM
In this case bread is essentially easy to substitute. Both companies are producing
brand bread and generic label bread. Their strategies are aligned at pushing the
competitor out of this local California market. Continental just happens to be bigger.
They can take a loss in one region long enough to drive all competitors out of business.
This is Predatory Pricing and should be a per se violation however, how can you
penalize one without penalizing the other because their practices are identical.
421232000,419964
419794956
419676448
RE:
Predatory Professor Devine
Pricing
12/6/2012 10:57:47 AM
The real "takeaway" this week for the final exam and for your understanding
is to understand how courts view conduct and distinguish illegal v. legal
monopolization and price fixing. When does conduct cross the line?
Ginger
421232000
419794956
RE:
Predatory Anthony Fletcher
Pricing
12/9/2012 5:58:31 PM
In order for a firm to show that it is not partaking in
illegal monopolization, that firm must be able to prove
the reasoning behind the lowering of its prices. If a firm
can prove that the lower prices are still actually above
their own cost/product, then this lowering of their prices
is legal, regardless if that price is now lower than their
competitors' costs. Like others have said, market share
plays a big role in a court's decision. Competition will
always be in the market place; it is impossible to prevent
it and firms will always try to get a head start on their
competition. Firms must be able to view their acts from
the outside to determine if anything seems illegal or
unethical about their pricing.
420147452,420463
419964418
419794956
RE:
Predatory Jaye Ambrose
Pricing
12/6/2012 5:59:24 PM
The U.S. Supreme Court has long held that price fixing and
monopolization are "per se" and crosses the line when it causes
harm to other competitors. Violations can result in fines or prison
terms.
420463213,420235
420147452
419964418
RE:
Predatory Joseph Waldrup
Pricing
12/6/2012 11:36:41 PM
I agree with you Jaye. This indeed crosses the line when
it directly affects the competition. In determining
whether a competitor possesses monopoly power in a
relevant market, courts typically begin by looking at the
firm's market share. If the firm has a pretty dominant
share of the market, I believe courts will favor the lesser
firm. Some courts have stated that it is possible for a
defendant to possess monopoly power with a market
share of less than fifty percent. Thus, a market share of
greater than fifty percent has been necessary for courts
to find the existence of monopoly power.
420463213
420147452
RE:
Predatory Blanche Meriweather
Pricing
12/7/2012 8:35:37
PM
I agree Joseph;
It has become well settled over the years that
certain forms of agreement among competitors
are so harmful to competition and consumers
that such conduct should be prohibited outright.
The antitrust laws deem these types of offenses
as per se illegal, because they will always or
almost always result in consumer harm.
Examples of per se offenses include price fixing,
bid rigging, market and/or customer allocations
and group boycotts.
421312031
420235492
420147452
RE:
Predatory Julie Hicks
Pricing
12/7/2012 9:40:26
AM
I agree that it is a strong case of illegal
monopolization when it causes harm to
other competitors. A successful claim
under § 1 of the Sherman Act requires
proof of three elements: (1) a contract,
combination, or conspiracy; (2) a
resultant unreasonable restraint of trade
in the relevant market; and (3) an
accompanying injury.
References:
http://caselaw.findlaw.com/us-7thcircuit/1603708.html
421312031
420235492
RE:
Predatory Professor Devine
Pricing
12/9/2012 7:58:40
PM
Blanche, Julie, and Class: And these
are exactly the types of cases where
the law steps in to protect consumers.
Ginger
420467717
420007239
419794956
RE:
Predatory Bryan Anderson
Pricing
12/6/2012 7:12:31 PM
I have anyways heard and understood what an illegal monopoly was, however I honestly was
not really clear on what a legal monopoly was. According to it investorpedia, a legal
monopoly is a company that is operating as a monopoly under a government mandate. A
legal monopoly offers a specific product or service at a regulated price and can either be
independently run and government regulated, or government run and regulated. A legal
monopoly is set up in the beginning as a perceived best option for both government and its
citizens. an example of this would be AT&T operated as a legal monopoly until 1982 because
it was deemed vital to have cheap and reliable service for everyone. Railroads and airlines
have also been operated as legal monopolies at different periods in history. In most cases,
capitalism has won out over legal monopolies as technology and the economy have become
more advanced..
http://www.investopedia.com/terms/l/legalmonopoly.asp#ixzz2EKO75aT9
420467717
420007239
RE:
Predatory James Pha
Pricing
12/7/2012 8:46:39 PM
I see... Legal monopoly is playing with a set of rules, and
illegal is you making your own rules. I do see how other
businesses have gone on without legal monopolize and
done better. As long you're not monopolizing, you're free
from rules and the potential is there to make more. I was
thinking, legal monopoly is probably good for new big
businesses. Have the government come in and set some
rules where the government can take advantage of your
service and you can steadily get your business going and
eventually get off of the legal monopolizing.
420206690,420478
419899298
Predatory
Pricing
0
Christopher Nordone
12/6/2012 3:37:30 PM
From my understanding, predatory pricing can be a per se violation of the Sherman Act if it is
done to create a monopoly and drive competition out of business. Predatory pricing is when a
seller of a product sets the price below the prices of their competitor and/or below the cost of
the product being sold. This is not a violation of the act because this can be done as part of a
short term sale or just to be competitive within the market and attract the attentions of
consumers. If predatory pricing is enacted over a longer period of time to the point of
intentionally forcing others out of business and creating a monopoly on the market where they
can set prices as high as they want, then this becomes a per se violation.
Predatory pricing can be an effective tactic for big retailers like Walmart who can set prices on
certain products way below cost because their profits from other products makes up for the loss
they are taking on cutting prices that low.
420478699,421165
420206690
RE:
Predatory
Pricing
419899298
Latrice Donaldson
12/7/2012 8:07:00 AM
Good morning Christopher. We think alike regarding predatory pricing and to
add a little to what you have already posted, predatory pricing is generally
practiced by large businesses that can afford to lose money on a particular
product or group of products at the same time its competitors cannot. As for
the case of Continental and Inglis, Inglis could have, according to Eric
Fenstermaker and Curtis Bittle, stopped production of their bread product,
which they would have still incurred fixed costs, but no further variable costs
and the preditor (Continental) would have loss money on both costs, as they
are selling below marginal cost.
References:
http://business.yourdictionary.com/predatory-pricing
http://mbaecon.wikispaces.com/predatory+pricing
421165851
420478699
420206690
RE:
Predatory Edwin Scales
Pricing
12/7/2012 9:13:57 PM
Predatory Pricing is not always deliberate for short term use. Consider a
traffic intersection with two gas stations. One oil company may charge higher
prices than a competitor. This is often not short term, this case is a different
situation because the quality or grade of gas may be different for specific
vehicles so they are not substitutes. Customers simply know where to buy
cheaper gasoline and others are willing to pay more and this does not drive
one out of business. I am simply not sure if people use significantly more
cheaper gas in bad economic terms?
421165851
420478699
RE:
Predatory Christopher Nordone
Pricing
12/9/2012 3:53:15 PM
Customers may be using more cheap gas during economic times,
but at the same time customers take into consideration
convenience and location of the gas station, but something that has
had a great impact on myself and many others that I know in
recent times is what is happening in the news with a particular gas
company. I used to heavily favor using BP gas, it was reasonably
priced, the station was in a good location and was on the way to
most places I went, plus it just seemed like my car ran better on BP
gas. Then the oil spill happened and I stopped using BP, even if
they dropped their prices to be the cheapest around in an attempt
to win back business I still refused to buy their gas unless I was in
an area I didn't know, was almost empty and had no idea where to
find the next gas station.
So I guess that is another way to use predatory pricing, in an
attempt to win back customers that is no longer loyal to that brand
or product.
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RE:
Predatory
Pricing
419899298
James Pha
12/7/2012 8:34:28 PM
Black friday could be an example of not violating the act in what your saying. These
are short term sales and will undercut competitors and will only last about a few hours
to a day only. If this was to go on much longer lets say Wal-Mart runs weekly
promotions on 40" LCD tv for a month and undercutting the competition, competitors
can now prove that Wal-Mart is violating the Sherman Act. Trying to take out
competitors by undercutting everyone way below cost.
I do agree with you that, these method of pricing cutting is great for large retailers,
they can absorb the lost, and earning it back somewhere else in the company. It's all
about foot traffic they are trying to do. Trying to get customers in, and make them
walk out with more than they initially wanted to get.
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RE:
Predatory Bryan Anderson
Pricing
12/8/2012 11:05:11 AM
I agree James and i certainly think that there is a fine line between predatory
pricing business strategies. I think you chose a great example with Black
Friday deals. I also do not believe these practices could be considered as
predatory pricing. Like you stated the majority of the Black friday deals are
more about trying to get more customers into the stores than it is to try to
drive anybody out of business. The stores that have the greatest deals on
black friday are willing to sell certain items at cost, with the idea that the
customers that come for certainly "deals" will purchase items at the store
that maybe they didnt intend on buying but since they are in the store
already, they make the purchase.
421083118
420625461
RE:
Predatory James Pha
Pricing
12/9/2012 12:34:59 PM
Hey Bryan, I use to work in sales, and I know these early bird sales
that they do on black friday is mainly to get people to come in and
if a few associates do their job right, then they up sale people on
more expensive items or selling other accessories to drive the sale.
Because this is practically done everywhere to most retailers, it's
not a violation of the Sherman Act. It's definitely a method of price
predatory because everyone else is doing it and it's not truly
undercutting another competitor.
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Per se
violaton
0
Stephanie Knights
12/7/2012 8:11:36 PM
Price fixing is a per se violation of the Sherman Act, since
setting minimum and maximum pricing to influence
competitor pricing is illegal. There are two types of pricing
fixing, which include vertical and horizontal pricing. Vertical
price fixing is when a manufacturer and independent retailer
make an agreement on a price. And when two competitors
agree to sell products at a certain price is called horizontal
price fixing.
http://definitions.uslegal.com/a/antitrust/
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0
Week 6 Discussion 1 Professor Devine
- Wrap Up
12/8/2012 8:16:08 AM
Class: In our first discussion thread, we talked about various antitrust statutes and what
constitutes actionable anti-competitive conduct. This topic will be extremely important for your
final examination. For the final exam, be sure to review the Microsoft case, what the court held
and why, and the elements of an antitrust violation.
We talked about Section 2 of the Sherman Act. As your text explains, even if conduct takes
place entirely in one state, if there is a "substantial economic effect on interstate commerce",
this federal statute arguably still applies. As we learned this week, it is not illegal for a monopoly
to exist (such as one newspaper or one gas station in a town); however, monopolization is
prohibited. A purposeful or deliberate anti-competitive act by a business must be shown, beyond
mere fortitude, skill, or foresight in a particular industry. In other words, the company must be
shown to possess monopoly power in a relevant geographic market, such as the power to
control prices or exclude competition in that market. For example, courts may consider factors
such as a company's market share percentage and whether competitors have substantial barrier
to enter that market. Even if monopolization does not actually take place, Section 2 of the
Sherman Act can be violated. Attempts to monopolize are a violation of Section 2 even if the
actual result is not monopolization. The violation occurs if it can be shown that the conduct
created a “dangerous probability” of monopolization. In preparation for the final exam, make
sure you understand these concepts, especially in light of the Microsoft case.
Importantly, there are both federal and state antitrust laws. For example, the state antitrust
laws give the states power to protect consumers and prosecute antitrust violations. These
statutes do work hand in hand with the federal statutes. Here are my Missouri antitrust statutes:
http://www.moga.missouri.gov/statutes/c416.htm
What have you learned this week about monopolies and monopolization? Are you surprised by
the elements that must be shown in order to prove a violation of law by a company? Are you
able to locate your state's antitrust laws?
Reference:
Missouri Revised Statutes. (2009, August 28). Retrieved from
http://www.moga.missouri.gov/statutes/c416.htm
Ginger
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RE: Week 6
Discussion Carletta Jones
1 - Wrap
Up
12/9/2012 8:34:41 PM
Modified:12/9/2012 8:35 PM
I was able to locate Texas anti-trust laws and these types of cases are investigated by
the attorney general of Texas. This type of conduct included monopolist and antitrust
conspiracies, price fixing, bid-rigging and territorial or customer allocation. They also
review mergers to determine if a proposed combination would lessen competition.
https://www.oag.state.tx.us/consumer/antitrust.shtml
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RE: Week 6
Discussion Joseph Waldrup
1 - Wrap
Up
12/8/2012 10:39:39 PM
What have you learned this week about monopolies and monopolization? Are
you surprised by the elements that must be shown in order to prove a
violation of law by a company? Are you able to locate your state's antitrust
laws?
I enjoyed reading upon monopolies and getting to understand them. Upon reading on
these I realize that I encountered monopolies more than I thought. I enjoyed buying
sneakers(Nike). Usually if there is a sneaker that is limited and everyone isn't able to
obtain it, those that are lucky enough to get it, sells it for double sometimes triple the
price.
Texas Antitrust Law:
http://www.bccmeteorites.com/b07.html
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RE: Week 6
Discussion Blanche Meriweather
1 - Wrap
Up
12/8/2012 7:06:38 PM
great point Professor;
I didnt know it took so much to prove a person wrong. Here's my state antitrust laws.
http://businesslaw.uslegal.com/antitrust/indiana-antirust-laws/
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RE: Week
6Discussion Michael Como
1 - Wrap
Up
12/9/2012 4:05:14 PM
Here is a link to Nevada's antitrust laws.
http://businesslaw.uslegal.com/antitrust/nevada-antitrust-laws/
I have learned many things about attempts to monopolize and I am
interested in finding out more about the telecommunications efforts to merge
by AT&T and T-mobile. I read a recent article in the WSJ that Sprint will now
look at T-Mobile now that AT&T's bid to merge was stopped. I think they will
face the same scrutiny as AT&T did, but it sounds like they will try to move
forward with it anyway.
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420854590
0
Sherman
Act
Chelsey Houwen
12/8/2012 8:19:04 PM
Well, under the Sherman Act there are two sections. The first section requires two or more
people, as a a person cannot contract, combine, or conspire alone. In other words its has to do
with an illegal act of joining together. The second section can be apply to anyone in regards to
monopoly. Per se violation is under the section 1. Per se violations uses a rule of reason to
analyze anticompetitive agreements that allegedly violates section one (constitute reasonable
restraints on trade). While predatory pricing occurs when one firm attempts to drive its
competitors from the market by selling its products below the normal cost of production. This
will be a violation under the Sherman Act Section 2.
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RE:
Sherman
Act
420854590
Blanche Meriweather
12/9/2012 7:45:07 PM
Great point Chelsey;
The Provisions of the Sherman Antitrust Act states that Trusts, etc., in restraint of
trade illegal; penalty "Every contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the several States, or with foreign
nations, is declared to be illegal. Every person who shall make any contract or engage
in any combination or conspiracy hereby declared to be illegal shall be deemed guilty
of a felony, and, on conviction thereof, shall be punished by fine not exceeding
$10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment
not exceeding three years, or by both said punishments, in the discretion of the court."
Monopolizing trade a felony; penalty "Every person who shall monopolize, or attempt
to monopolize, or combine or conspire with any other person or persons, to
monopolize any part of the trade or commerce among the several States, or with
foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be
punished by fine not exceeding $10,000,000 if a corporation, or, if any other person,
$350,000, or by imprisonment not exceeding three years, or by both said
punishments, in the discretion of the court."
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2D-49-CC-60-88-9